The 25 largest university endowments' use of women- and minority-owned asset management firms ranges from 5.1% to 35% of assets under management, according to a survey by two members of Congress.
In July, Rep. Emanuel Cleaver II, D-Mo., and Joseph P. Kennedy III, D-Mass., asked the 25 largest university endowments to provide data on asset manager diversity and hiring practices.
Just three responding universities detailed specific targets or projections for future allocations to diverse-owned firms. While some institutions have implemented diversity and inclusion practices, many respondents were found to not be tracking investments with diverse-owned firms.
The University of Notre Dame provided data after the deadline. It reported that 21% of the endowment's allocation to U.S. managers is with firms majority-owned by women or minorities.
Mr. Cleaver called the findings an important first step that will help inform Congress on steps "for facilitating greater diversity within an industry that has tremendous influence on the allocation of hundreds of billions of dollars in assets, and let's be clear: There is certainly room for improvement," he said in a statement.
In the same statement, Mr. Kennedy criticized institutions that tout diversity in admissions, "but turned a blind eye to it with their investments. With their massive endowments, universities are uniquely positioned to not just encourage gender and racial diversity among asset managers, but demand it," he said.
The report called the issue a matter of congressional oversight because the government subsidizes endowments in the form of tax exemptions, and schools must follow other non-discrimination laws that "are an extension of the federal government's interest in closing social and economic opportunity gaps."
The inquiry was prompted by the death of George Floyd, and the need for individual and collective action. "Institutions have been called upon with urgency yo examine their relationship to racism, and including chief investment officers in the discussion was important," the report said.
Robert Raben, executive director of the Diverse Asset Managers' Initiative, said getting the data was "a big deal," and universities now need to track and report it consistently, and to look at the underlying reasons for the lack of diversity.